ommercial Property:
Lease vs. Licence
I
n business, one can occupy a property by either leasing it or by obtaining a licence to occupy. Generally, where there is a lease, the owner is known as a landlord, the occupier is known as a tenant, and the fee paid for the occupation is known as the rent. A lease is an agreement in which the landlord agrees to give the tenant the exclusive right to occupy a property, usually for a specific term and, in exchange, the tenant agrees to give the landlord some sort of consideration (i.e. rent). A lease transfers to the tenant a leasehold interest in the property and, unless otherwise provided in the lease, a lease is transferable and irrevocable. Where there is a licence, the owner is known as a licensor, the occupier is a licensee and the fee paid for the occupation is known as a licence fee. A licence gives the permission of the owner to an individual or an entity to use property for a specific purpose and for a specific time frame. Normally this is on a short-term basis of six months to a year. Unlike a lease, it does not transfer an interest in the property. It is personal to the licensee and any attempt to transfer the licence terminates it. It is (usually) revocable and can be either exclusive or nonexclusive. The individual circumstances will dictate which type of agreement is more suitable. Owners often want to create a licence with the aim of trying to avoid giving the occupier statutory protection under the Rent Restriction Act (“the Act”) against eviction when the rent is in arrears or when increases in rent are greater than 7.5%. This is not advisable as the courts lean in favour of finding that these types of licences are leases in essence. Indeed, the courts
disregard labels and terminologies when making their determination of whether an agreement is a lease or licence. Therefore, an agreement titled “licence” does not necessarily mean that it is one. Reasons for owners wanting to avoid the statutory protection granted to leases un ??????????????????????????????????????????????????????????????????????????????%??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????%???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
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